MONTPELIER — Faced with underperforming state revenues and higher-than-expected costs for mental health and human services, administration officials are asking lawmakers to dip into reserve funds and expend some recent court settlements.

The annual budget adjustment process got under way in earnest Wednesday when Finance Commissioner James Reardon unveiled a plan to plug the budgetary holes that have opened up since lawmakers approved the fiscal year 2013 spending plan in May.

Among the biggest setbacks: a July report in which state economists reduced revenue estimates by more than $10 million.

Administration Secretary Jeb Spaulding said weaker revenue forecasts have been compounded by increasing demands on government services.

“In the big picture, one of the challenges we continue to face in government is that despite everyone asking for small, efficient government, the expectations for what government should be undertaking continue to grow,” Spaulding said.

To preserve government services without running a deficit, Spaulding said, the Shumlin administration is asking lawmakers to take about $4.7 million from two reserve funds. He also wants them to spend the roughly $4.7 million collected in three major court settlements last year related to consumer protection.

“This is ... to make sure we carry those programs through, cover our caseload increases and finish with a balanced budget,” Spaulding said during a briefing for the media.

Upward pressures on this year’s budget are legion, ranging from $200,000 for increased mosquito control efforts in the wake of an eastern equine encephalitis outbreak this summer, to $560,000 in unanticipated gasoline costs for state police cruisers.

The lion’s share of the unexpected costs, however, stems from health care and human services, where the rollout of a new mental health system and higher caseloads have increased budgets, according to Reardon.

The most pointed increase comes at the Department of Mental Health, which will need about $20 million more than what lawmakers budgeted.

Mental Health Commissioner Mary Moulton said the additional request — more than 10 percent of the annual budget — stems largely from a failure to plan for operating costs at the newly opened eight-bed Green Mountain Psychiatric Care Center in Morrisville.

“It just was not budgeted for,” Moulton said Wednesday.

Rep. Martha Heath, a Westford Democrat and chairwoman of the House Committee on Appropriations, said the increase in mental health spending isn’t as pronounced as it appears on paper. New costs being absorbed in mental health, Heath said, have freed up money elsewhere in state government. All told, Heath said, the net increase in mental health spending amounts to only about $4.7 million in general fund money.

At the Department for Children and Families, costs are up by more than $10 million over what the administration projected earlier this year, an increase due largely to the number of children and adults using services, Reardon said.

He said that isn’t necessarily a bad thing. For instance, Vermont will spent about $2 million more than expected to accommodate the high number of kids enrolled in early child care programs deemed to have met certain quality standards.

“And that’s something I’m more than happy to pay for, because if you have quality child care at the front end, you have more chances for success as you enter elementary education,” Reardon said.

He said he was more troubled by the nearly $4 million increase at the Department of Aging and Independent Living, money needed for services to people with disabilities.

“That is not sustainable from my perspective,” he said. “And that is a combination of both new caseload and additional needs for existing caseload.”

Administration officials resolved much of the budgetary shortfall by finding other revenue sources.

The Tax Department has seen fewer claims than it expected for homeowner and renter rebates, resulting in about $1.7 million in extra revenue.

The state’s share of Medicaid and long-term care costs, meanwhile, is about $13 million less than what lawmakers had thought it would be. And an actuarial revision in the state health insurance program freed up about $5.8 million.

Attorney General William Sorrell has collected about $4.7 million in settlements with GlaxoSmithKline, Janssen Pharma and Capital One — money Reardon said should be used to plug the gap. He said he could not recall a year in which the state had relied so heavily upon court settlements to resolve midyear budget difficulties.

Heath, whose committee is meeting this week to vet the budget adjustment plan, said she’s grateful the state has some Medicaid savings to offset some of the other increases. She said lawmakers will likely have questions about some aspects of the administration’s proposal, including a request to double the budget for emergency housing assistance, from about $2 million to $4 million.

“Which is really just money that’s going to motel beds,” Heath said. “We’ll want to look at what’s being done to prevent people from losing their homes in the first place.”